.JPG Method Home, a San Francisco cleaning-products company that was recently named the 7th fastest-growing private firm in America by Inc. magazine. The two founders, Eric Ryan (back) and Adam Lowry (front). Liz Hafalia/The Chronicle MANDATORY CREDIT FOR PHOTOGRAPHER AND SAN FRANCISCO CHRONICLE/ -MAGS OUT less

.JPG Method Home, a San Francisco cleaning-products company that was recently named the 7th fastest-growing private firm in America by Inc. magazine. The two founders, Eric Ryan (back) and Adam Lowry (front). ... more

Photo: Liz Hafalia

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Method Home, a San Francisco cleaning-products company that was recently named the 7th fastest-growing private firm in America by Inc. magazine. . Liz Hafalia/The Chronicle

Method Home, a San Francisco cleaning-products company that was recently named the 7th fastest-growing private firm in America by Inc. magazine. . Liz Hafalia/The Chronicle

Photo: Liz Hafalia

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.JPG Method Home, a San Francisco cleaning-products company that was recently named the 7th fastest-growing private firm in America by Inc. magazine. The two founders, Eric Ryan (left) and Adam Lowry (right).
. Liz Hafalia/The Chronicle MANDATORY CREDIT FOR PHOTOGRAPHER AND SAN FRANCISCO CHRONICLE/ -MAGS OUT less

.JPG Method Home, a San Francisco cleaning-products company that was recently named the 7th fastest-growing private firm in America by Inc. magazine. The two founders, Eric Ryan (left) and Adam Lowry (right). ... more

Photo: Liz Hafalia

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Cleaning up without dot-coms / Belittled entrepreneurs choose household products over the high-tech industry and become highly successful

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Six years ago, at the height of the Internet boom, Eric Ryan's friends laughed at him as he turned down one dot-com job offer after another to start a company in the stodgy, low-tech business of household cleaning products.

Today, many of those dot-coms are long gone.

And Ryan's company, San Francisco's Method Products, was recently named the seventh fastest-growing private company in America by Inc. magazine.

Method, with its minimalist design and trendy-looking soap bottles shaped like teardrops and bowling pins, is a familiar sight to shoppers at stores such as Target, Safeway and Office Depot.

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Its revenue of about $45 million is just a drop in the wash-bucket compared with long-standing industry giants like Clorox, which had total sales of $4.4 billion in 2005.

But Method has managed to grow prodigiously at a time when the cleaning products industry overall is largely stagnant.

And the young company's determination to shake things up is changing practices within the industry, as well as turning heads in the design world.

"Method has reoriented how people perceive these household cleaning products that they used to shove under the sink," said Hsaio-Yun Chu, an assistant professor of industrial design at San Francisco State University. "It's very sexy. It's something you can display proudly on top of your sink. It's another accessory to "cool," almost a lifestyle item rather than a cleaning item."

But six years ago, the company was little more than a wild idea shared by two high school buddies from Michigan who were rooming together in San Francisco.

Ryan, now 33, was working in advertising and his friend Adam Lowry, now 32, was a chemical engineer who had worked for a foundation researChug global warming. The two were intrigued by companies like Apple Computer Inc. that had used a cutting-edge design sensibility to become industry leaders.

"We started to discuss different industries that needed to be reinvented from a design standpoint and from an environmental standpoint," Lowry said.

The two became intrigued by household cleaning products. It is a huge industry, with annual sales of about $18 billion. But it hadn't changed much since the 1950s. Companies talked mostly about how well their products killed germs; brands like Cascade and Comet changed little from decade to decade.

"The household cleaning aisle was so big, yet everything was so boring," Ryan said.

Ryan and Lowry decided to create a brand of household cleaning products that would appeal to the fashion sensibilities of hip, young urbanites.

"Your house is this high-interest, high-emotion place, but the products people used for it were just commodities," Ryan said. "We were the first ones to treat cleaning as cool. The category treats it as a chore, and to a lot of people it is a chore -- but it's also therapeutic, a ritual, with a sense of purpose to it. Method is very much about design, fragrance, the romance of it and trying to tie (cleaning) back to your home."

They started working with exotic scents like cucumber, lavender and mandarin orange. They developed a sleek, uncluttered style for their bottles and labels. They looked for nontoxic, non-polluting ingredients, although they consciously decided not to market themselves as a "green" brand.

"There are plenty of eco-brands out there, but it's a very small category," Ryan said. "If you go out and call yourself a green cleaner, you'll just steal shelf space from Seventh Generation."

Ryan and Lowry raised a total of about $200,000 from friends and family, including $10,000 from Ryan's grandmother. "You don't want to lose their money and be embarrassed to show up at Christmas," he said. "But we had no choice because we couldn't go to a bank. It puts stress on your shoulders. It's not only about you anymore, so you just have to make it work."

Their first product was an all-purpose spray cleaner. They drove around to local supermarkets, pitChug it to store managers as they arrived at work at 6 a.m. Once they got a few placements, they conducted in-store demos themselves. They drove by the stores each week to count the bottles on the shelves and replace ones that had been purchased; their first week, they sold a total of four bottles of cleaner.

At one point, they ran out of cleaner for a Mollie Stone's store and ran around to friends' houses, taking back bottles they had given away and refilling them so they could re-stock the store.

Ryan and Lowry eventually beefed up their capital by bringing in outside investors including former Yahoo Chief Executive Officer Tim Koogle.

Their big break came with Target in 2002. Lowry and Ryan felt their approach would be a good fit with Target, which was coupling famous designers with affordable prices. So they contacted award-winning industrial designer Karim Rashid, known for bringing high-end design concepts to mundane items like wastebaskets.

Some designers might have said Method -- an unknown company with little capital and youngsters at the helm -- wasn't worth their time. But Rashid liked startups and appreciated Method's vision.

"The cleaning product industry is very backward and many of the products have a 1950s language," Rashid wrote in an e-mail to The Chronicle. "They are cluttered with graphics, too much information and complicated ugly forms. My intention was to develop holistic design language for a holistic brand. Clean, simple, neat, understated, and designed to really perform in our contemporary technological age."

Rashid designed what became Method's signature product -- a bottle of dish soap shaped like a chess pawn or bowling pin. It was built to let soap flow out the bottom of the bottle, so that users wouldn't have to turn it upside down.

The design proved to have some glitches: Early versions didn't close well and leaked all over store shelves. But it succeeded in putting Method on the map and getting them in the door at Target.

"Their idea on the packaging side was very novel and carved out a niche," said Tom Vierhile, an analyst who tracks new products for a company called Datamonitor.

"It was quite polarizing," said Method CEO Alastair Dorward, who had joined the company full time in 2001. "One group of customers thought it was groundbreaking. The other said, 'That's weird, I'll go back to Dawn.' "

From there, Method expanded into products such as teardrop-shaped bottles of hand soap, ultra-concentrated laundry detergent, specialty cleaners for surfaces like leather and granite, and most recently, air fresheners and candles. Revenue shot from $156,000 in 2002 to $3.4 million in 2003, according to Felicia McClain, a research analyst with Mintel International.

For instance, Method's dishwasher detergent sales grew by 28.5 percent over the past year, even though overall sales for that category grew by less than 2 percent, according to Information Resources Inc., a Chicago research firm. Method's sales of liquid hand soap grew by 68 percent during that same period, while industry leader Softsoap grew by just 12.8 percent.

But the risk of basing a brand on iconoclastic design is that design can be easily copied. And competitors did start adopting some of Method's innovations, such as the eclectic scents and the ultra-concentrated detergent.

"I've seen a lot of the major brands switch up their scents, combining different things, and using brighter graphics on their packaging," McClain said.

Emulation by larger, long-established competitors is only one of the challenges currently confronting Method. The company also faces the growth of private label or "house" brands, one of the biggest trends in the cleaning product arena.

"Private label brands have grown so much, to a point where you have premium upscale private label brands," McClain said. "That will be huge competition for years to come."

Method, in turn, has counter-attacked by trying to differentiate itself in ways that go beyond design aesthetics. In 2004, it began a lighthearted "people against dirty" marketing campaign that connected the pleasure of a clean home with the need for a clean environment, pointing out that Method products are biodegradable and derived from natural materials like soy and palm oils. The company more or less circled back to some of the environmental marketing it initially spurned.

"People typically discover Method because of the design, love using it because of the fragrance, then discover it's good for you," said Ryan. "It's that third piece that drives loyalty. It's easy to copy the design, the fragrance, the attitude, but you can't copy the philosophy. It's like Häagen-Dazs going up against Ben & Jerry's. Häagen-Dazs could copy the flavors, but they could never copy the social goodness of Ben & Jerry's."

Method also hopes to parry its larger competitors by being more nimble. Because the company contracts out all its manufacturing -- mostly in the United States -- it can easily change its designs or mix of products. Dorward, Method's CEO, said that his 58-person staff can get an idea onto store shelves in four to six months, compared with two years for larger consumer product companies.

"We don't have to focus-group everything to death, so decisions can be made more rapidly," Dorward said. "The big companies are like the full launch of a fleet. We're a little more like jumping into a speedboat and taking off. In the fashion world, time-to-market is everything. Increasingly, Method has introduced time-to-market as an important criteria for consumer products."

Earlier this year, Method moved into more-roomy quarters between San Francisco's Financial District and Chuatown. Its office mirrors the design of its products: sleek, clean, modern, with an open floor plan and no private offices, and a light scent of lavender in the shiny stainless-steel elevator.

The privately held company doesn't disclose its revenues, but Information Resources Inc. estimated its sales at $44.9 million for the year ending in August 2006, not including sales at Wal-Mart. Inc. magazine estimated that Method's revenues have grown by 3,390 percent during the past three years.

Some analysts suggest that Method could be an attractive acquisition for one of the large household cleaning product companies. "A lot of companies launch to be sold," said Vierhile of Datamonitor. "That's where the big money is -- you get a niche going, then you can really cash in."

But Method's executives say they are more interested in continuing to shake up the cleaning products world than in cashing out.

Ryan said that taking the company public at some point is "not out of the question," particularly if it needs capital to expand internationally. Dorward said he can imagine Method growing over the next decade to a point where its revenues are in the $500 million to $1 billion range.

"Will we ever be bigger than Clorox? I have no aspiration to that," Dorward said. "We've still got a lot of innovation and environmental leadership to bring, which is something best achieved by a mouse rather than an elephant. And, quite frankly, we're having a lot of fun."